Hi,
1) That is intentional, as each tag is considered as a single word, it will not work with multiple words unfortunately.
2) This can be very problematic. Currently in WordPress, there is only one way to get the categories in hierarchical order, and that is, when the all the categories are requested.
A few weeks ago there was a similar request, and this custom code was the closest we could work out together. You should try that, however there is no guarantee it works, and there is no other usable solution either. We even tried to iject the one from the WordPress core, but that does not work without getting all the terms.